IMA CALLS FOR REFORMS TO HELP INVESTORS AND THE COMPETITIVENESS OF THE UK

The Investment Management Association (IMA) is calling for a number of reforms to taxation in its pre-Budget submission to the Chancellor of the Exchequer.  The IMA has identified some key initiatives that will help increase confidence in long term savings and enable people to manage their retirement income carefully.  There is also the possibility of opening up new opportunities for the UK fund industry that will enhance its competitiveness and bring economic benefits and additional revenue for the Treasury.  

In particular, the submission calls for: annual increases in the ISA limit to keep it at least in line with inflation, the abolition of stamp taxes on UK equities and  of the fund-specific Stamp Duty Reserve Tax (SDRT) regime and fair, non-discriminatory treatment of offshore investments. 

Commenting, Richard Saunders, Chief Executive of the Investment Management Association, said:

"It's important that a clear message is delivered about the benefits of long term saving.  With this in mind we are calling for the Government to help savers and pensioners by increasing the ISA limit annually at least in line with inflation and to abolish the requirement for people to turn their pension savings into an annuity by the age of 75. 

Stamp duty on equities represents a real drain on the value of people's investments and savings as well as impacting the cost of equity for companies on trading activity.  We are calling for the abolition of Stamp Duty on equities.  A recent study* concluded that its abolition could give rise to a permanent rise in GDP. 

We are also calling for a number of other reforms which will help the competitiveness of the UK fund management industry.  Major progress has been made in a number of areas, but the UK cannot rest on its laurels.  A further number of key steps are now required to ensure that the UK is seen as a serious domicile for fund management.  If we are successful in this endeavour, then the Government stands to gain through an increase in tax revenue."

The IMA's agenda for reform:

Pensions and savings

• Annual increases to the ISA limit to keep it at least in line with inflation.
• The Government to communicate clearly the benefits of long-term saving, while also considering the need to develop a more flexible retirement income regime for the longer term.
• The abolition of Stamp Duty and Stamp Duty Reserve Tax on UK equities.

The competitiveness of the UK fund management industry

• Abolition of the fund-specific Schedule 19 SDRT regime, a tax regime which is unique to the UK.
• Introduction of a UK tax-transparent contractual fund vehicle to encourage cross‑border institutional investment.
• Specific provisions to enable unauthorised UK funds and offshore funds to convert to a Property Authorised Investment Fund (PAIF) without a potential SDLT charge or additional administrative and legal costs.  (A PAIF is a UK fund introduced in April 2008 for tax-efficient investment into property.)

Fair, non-discriminatory treatment of overseas investments

• The Government to consult on amendments to legislation to remove the remaining tax distortions that discriminate against investments in collective investment vehicles, particularly those relating to vehicles not constituted as bodies corporate.

The IMA's pre-Budget representations can be viewed here. 

-ENDS-

‘Stamp Duty: its impact and the benefits of its abolition', May 2007, commissioned from Oxera by the ABI, City of London Corporation, IMA and the London Stock Exchange.  The report concluded that the abolition of stamp duty could result in a permanent increase to GDP of between 0.24% and 0.78%.

About the Investment Management Association
IMA is the trade body for the UK's £3 trillion asset management industry.  The money its members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs.  Its role is to represent the industry and promote high standards. 

The IMA's press releases and statistical information can all be found at www.investmentuk.org.

For further information, please contact:
Noreen Shah, Press Officer, IMA, 0207 831 0898
Ginny Broad, Head of Communications, IMA, 0207 831 0898 or 07834 089332